Market Talk – October 8, 2020

Posted Oct 8, 2020 by Martin Armstrong |

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ASIA:

China represents a strategic threat to Britain as its Navy could reach the North Atlantic via the Arctic by a route opened up by global heating, the head of the Royal Navy has said. Adm Tony Radakin, the first sea lord, said an “increasingly assertive” China had the capability to reach waters north of the UK by using the emerging Northern Sea Route. Experts say it is at least 10-12 sailing days quicker than traditional routes via Singapore and the Suez canal, and its emergence has become a growing source of concern at senior levels of the navy. They fear China will work with the Kremlin to try to exploit it for trade and military purposes.

India’s Tata Consultancy Services TCS said on Wednesday it would buy back shares worth up to USD 2.18 billion), and reported a fall in quarterly profit as it set aside 12.18 billion rupees to cover legal fees related to a US lawsuit. TCS said it would buy back up to 53.3 million shares at 3,000 rupees per share, a 9.7% premium to its stock’s closing price on Wednesday. A surge in TCS shares on Monday after it disclosed it would consider a buyback helped its market value cross 10 trillion rupees, making it the second Indian firm to achieve the milestone after Mukesh Ambani’s Reliance Industries.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 224.25 points or 0.96% to 23,647.07
Shanghai closed
Hang Seng decreased 49.51 points or -0.20% to 24,193.35
ASX 200 increased 65.60 points or 1.09% to 6,102.00
Kospi increased 5.02 points or 0.21% to 2,391.96
SENSEX increased 303.72 points or 0.76% to 40,182.67
Nifty50 increased 95.75 points or 0.82% to 11,834.60

The major Asian currency markets had a green day today:

AUDUSD increased 0.0027 or 0.38% to 0.71651
NZDUSD increased 0.0007 or 0.10% to 0.65805
USDJPY increased 0.0570 or 0.05% to 106.02
USDCNY increased 0.00514 or 0.08% to 6.73838

Precious Metals:

Gold increased 6.38 USD/t oz. or 0.34% to 1,893.60
Silver decreased 0.015 USD/t. oz or -0.06%% to 23.825

Some economic news from last night:

Japan:

Adjusted Current Account increased from 0.96T to 1.65T

Current Account n.s.a. (Aug) increased from 1.468T to 2.103T

Foreign Bonds Buying decreased from -79.5B to -341.3B

Foreign Investments in Japanese Stocks increased from -274.4B to 530.9B

South Korea:

Current Account (Aug) decreased from 7.45B to 6.57B

New Zealand:

ANZ Business Confidence increased from -28.5 to -14.5

Indonesia:

Retail Sales (YoY) (Aug) increased from -12.3% to -9.2%

Some economic news from today:

Hong Kong:

Foreign Reserves (USD) (Sep) increased from 449.90B to 453.30B

Japan:

Economy Watchers Current Index (Sep) increased from 43.9 to 49.3

EUROPE/EMEA:

Labour has called for stronger action to prevent a winter surge in unemployment after releasing figures that show the UK government is providing less generous wage support to employers than other European countries. The shadow chancellor, Anneliese Dodds, accused Rishi Sunak of adopting a “sink or swim” approach as Labour published a report unfavorably comparing the Treasury’s jobs support scheme with what was on offer in Germany, France, and the Netherlands. In his winter economic plan last month, the chancellor announced the replacement of the government’s furlough scheme with a jobs support scheme under which an employee who working at least a third of normal hours has their pay topped up by the state and their employer.

The UK government’s latest Brexit legislation puts Britain on a “very slippery slope” towards a dictatorship, the former president of the UK Supreme Court has warned. Speaking at a virtual meeting of eminent lawyers on Wednesday evening, the judge told MPs and peers that the bill’s offending clauses “need to be defeated” preferably in parliament.

The major Europe stock markets had a green day today:

CAC 40 increased 29.94 points or 0.61% to 4,911.94
FTSE 100 increased 31.78 points, or 0.53% to 5,978.03
DAX 30 increased 113.64 points or 0.88% to 13,042.21

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00076 or -0.06% to 1.17581
GBPUSD increased 0.00171 or 0.13% to 1.29344
USDCHF increased 0.00006 or 0.01% to 0.91710

Some economic news from Europe today:

Germany:

Gemran Current Account Balance n.s.a (Aug) decreased from 21.0B to 16.5B

German Exports (MoM) (Aug) decreased from 4.7% to 2.4%

German Imports (MoM) (Aug) increased from 1.1% to 5.8%

German Trade Balance (Aug) decreased from 18.0B to 15.7B

Swiss:

Unemployment Rate n.s.a. (Sep) decreased from 3.3% to 3.2%

Unemployment Rate s.a. (Sep) decreased from 3.4% to 3.3%

US/AMERICAS:

According to a report from the Labor Department, US jobless claims for the week ending in October 3 totaled 840,000. Although figures are improving, unemployment remains well above the 665,000 high of the Great Recession of 2007-2009. On the upside, unemployment claims have remained beneath one million since August 2020. According to Reuters, nearly half of the 22.2 million Americans who lost their livelihoods during the pandemic are still unemployed.

The Office of the Comptroller of the Currency has ordered Morgan Stanley to pay a $60 million fee for failing to monitor client data in 2016 and 2019 in a safe manner. The bank failed to decommission two wealth management data centers, and although the actions occurred through vendors, the OCC found the bank guilty of “noncompliance” of the “Interagency Guidelines Establishing Information Security Standards.”

Less than 11% of Americans with federal student loans repaid them during the coronavirus pandemic. CNBC reported that the average American is burdened with $30,000 worth of student debt, which has tripled over the last two decades.

The next presidential debate is scheduled for October 15, but the defending candidate may not be in attendance. The committee decided to virtually hold the next debate, citing Trump’s recent coronavirus diagnosis as the reasoning. The Trump camp claims the rules were changed to favor Joe Biden and manipulate the debate. The Trump campaign team may opt to hold a private press conference or rally on the day of the debate instead.

US Market Closings:

Dow advanced 122.05 points or 0.43% to 28,425.51
S&P 500 advanced 27.38 points or 0.8% to 3,446.83
Nasdaq advanced 56.38 points or 0.58% to 11,420.98
Russell 2000 advanced 17.51 points or 1.09% to 1,628.55

Canada Market Closings:

TSX Composite advanced 106.24 points or 0.65% to 16,534.54
TSX 60 advanced 5.47 points or 0.55% to 991.28

Brazil Market Closing:

Bovespa advanced 2,393.47 points or 2.51% to 97,919.73

ENERGY:

The oil markets had a green day today:

Crude Oil increased 1.35 USD/BBL or 3.38% to 41.3000
Brent increased 1.46 USD/BBL or 3.48% to 43.4500
Natural gas increased 0.024 USD/MMBtu or 0.92% to 2.6340
Gasoline increased 0.0239 USD/GAL or 1.98% to 1.2333
Heating oil increased 0.0285 USD/GAL or 2.45% to 1.1925

Top commodity gainers: Heating Oil (2.45%), Crude Oil (3.38%), Brent (3.48%), and Lumber (3.35%)
Top commodity losers: Canola (-0.49%), Oat (-0.43%), Ethanol (-0.44%), and Wheat (-1.97%)

The above data was collected around 16:55 EST on Thursday.

BONDS:

Japan 0.05%(+1bp), US 2’s 0.15% (-1bps), US 10’s 0.78%(-1bps);US 30’s 1.58%(-1bps), Bunds -0.50% (-0bp), France -0.25% (-2bp), Italy 0.76% (-3bp), Turkey 13.37% (+33bp), Greece 0.89% (-6bp), Portugal 0.22% (-3bp), Spain 0.21% (+2bp) and UK Gilts 0.29% (-2bp).